China to Keep Prudent Monetary Policy in 2013: Central Bank

Published 11:21 AM ET Mon, 31 Dec 2012
Reuters

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China will stick to a prudent monetary policy next year and keep consumer prices stable, its outgoing central bank governor, Zhou Xiaochuan, said on Monday, in fresh sign that Beijing won't be changing direction when the new government takes over in 2013.

Reiterating China's long-stated vow to reduce the level of central planning in its economy and make room for more market forces, Zhou also said China will deepen reforms in its financial sector in 2013.

"In 2013, we will continue to implement prudent monetary policy and make policies more pre-emptive, targeted and flexible," Zhou said in a brief new year address.

"We will keep overall price levels basically stable and promote healthy and sustainable growth of the economy," he said. "We will also further deepen financial reforms and the opening up of financial markets."

Zhou's remarks follows similar comments from China's soon-to-be-retired president, Hu Jintao, who promised that reform of China's economic growth model would be a crucial theme next year.

Hu said in a separate new year address broadcast nationally that China's economy will grow at a balanced and sustainable pace in 2013, whilst noting the challenge from sluggish growth for the world economy.

"Transforming the economic growth model will be a main theme," Hu said, without giving further details. "The trend of weak global economic growth will continue."

China's leaders have repeatedly promised to encourage domestic consumption and reduce the nation's heavy reliance on exports for growth, a task that has become more pressing due to expectations of prolonged weak demand in developed nations.

Most analysts and academics agree China needs to transform its growth model to allow consumption, not exports and investment, to drive activity.

But there is no clear agreement on how or when China can pursue such changes.

Zhou, who has been head of the central bank since 2003, is set to retire in coming months.

Hu will relinquish office March 5 when China starts its annual parliament meeting, to make room for his successor Xi Jinping.

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